Ian McCartney, a Trade and Industry Minister on the political left, will be promoted in an attempt to prevent rifts between the Government and the Labour Party. He will act as the party's voice in government, with a brief to revive the morale of grassroots activists.
Mr McCartney, who is expected to become Labour's campaigns co-ordinator, will join an "A team" to be set up this autumn in order to plan Labour's strategy for the next general election. It will be headed by the Chancellor, Gordon Brown.
In the reshuffle, which may take place on Wednesday, Mo Mowlam is likely to stay on as Northern Ireland Secretary for a final attempt to push forward the stalled peace process. Peter Mandelson, who resigned from the Cabinet last December over his pounds 373,000 home loan from Geoffrey Robinson, but has been tipped as Ms Mowlam's replacement, will probably have his comeback deferred.
Paul Murphy, Ms Mowlam's deputy, is expected to beomcome Welsh Secretary, succeeding Alun Michael, now First Minister in the new Welsh Assembly.
Mr Blair, frustrated at the lack of progress in driving his policies through Whitehall, looks certain to sack Jack Cunningham, the Cabinet's "enforcer".
Replacement candidates at a more powerful Cabinet Office include Alan Milburn, the Chief Treasury Secretary and Lord Falconer of Thoroton, who is a Cabinet Office minister.
Mr Blair will candidly acknowledge his government's failings. He will say that today's annual report on his administration's performance - on sale at Tesco supermarkets - shows "a government governing for all its people", but he will admit: "Not everything has gone well and we put up our hands and acknowledge that. We will seek to learn the lessons."Reuse content